View Full Version : Activist Investors Attempting to Undermine Ruger and S&W
https://www.forbes.com/sites/morgansimon/2018/09/21/gun-control-an-issue-for-policymakers-or-investors/#2039097651bf
Q: Your activism has targeted Sturm, Ruger & Co.and Smith & Wesson —why? As manufacturers, how have they contributed to gun violence? Why do you view them as responsible?Manufacturers could be doing so much more to contribute to gun safety. They could be investing in safer guns, monitoring their distribution chain, and telling the gun lobby groups they fund to support universal background checks and federal funding for gun safety research. But, they don’t—and there’s a reason. There was a moment in 2000 when Smith & Wesson attempted to take steps to transform itself into a more responsible company—in response, the NRA ran a campaign that nearly bankrupted them (https://www.washingtonpost.com/news/retropolis/wp/2018/02/27/a-gunmaker-once-tried-to-reform-itself-the-nra-nearly-destroyed-it/?utm_term=.2416c09d2ae2). So essentially we have a situation where gun manufacturers use shareholders’ money to fund the very organization, the NRA, that would seek to destroy them if they ever tried to be more socially responsible.
Gun manufacturers are partly responsible for the current situation, but we also view the largest investors in these companies as responsible as well—fund managers like BlackRock and Vanguard, which have the power to push these companies to do better but haven’t done so. BlackRock and Vanguard alone hold about 25 percent of Sturm Ruger’s stock—but even after the Parkland massacre, they failed to demand accountability from Sturm Ruger’s board (https://money.cnn.com/2018/08/31/news/companies/blackrock-vanguard-sturm-ruger-board-vote/index.html).
More info here:
https://actionnetwork.org/petitions/does-your-portfolio-fund-racist-attacks-from-the-nra
They could be investing in safer guns
That's a totally new direction for S&W. Like "never been done before" territory.
I'm fine with activists owning both brands. It kind of fits well with the history of both supporting worthless gun control measures in the past.
My M1917 S&W weeps.
When there was "activist investor," I thought it was Bill and Carl at it again.
"Bill & Carl's Retarded Adventure (2013-present)"
https://amp.businessinsider.com/images/53c6f0856bb3f7e17ec1a1b4-750-562.jpg
The reason S&W went down when they tried to make "safer guns" after Saf-T-Hammer acquired them, was because their crappy locks could sometimes engage when you least wanted them to. I love my 686-2, but I won't buy another S&W with the zit on the side.
Saf-T-Hammer buys Smith & Wesson (https://www.bizjournals.com/phoenix/stories/2001/05/14/daily1.html)
The Wild West lives again -- only this time in a safer incarnation.Saf-T-Hammer Corp. is not only bringing the firearms giant Smith & Wesson name back to the U.S. with today's purchase of the firm, but also to Arizona -- a state once synonymous with guns and shootouts.
Scottsdale-based Saf-T-Hammer said it will be incorporating its safety features in Smith & Wesson fireams, including the .357 Magnum and .44 Magnum made famous by Clint Eastwood.
As part of its acquisition of the firearms company, Saf-T-Hammer will be changing its name to the Smith & Wesson Holding Corp., according to Saf-T-Hammer chairman Mitchell Saltz.
Investors in American Outdoor Brands Corp. on Tuesday won a shareholder vote urging the top U.S. firearm maker to do more to address gun violence.
The proposal asks the maker of Smith & Wesson guns to track shootings involving their products and consider investing more in technology to prevent their unauthorized use. Nearly 70% of investors in Sturm, Ruger & Co. backed a similar shareholder proposal at that company in May.
The percentage of shareholders who backed the proposal at American will be disclosed in later financial filings. American Outdoor said it would prepare the required report by February, but made no further concessions to investors who have won backing from some large fund managers.
American Outdoor Chief Executive James Debney said at Tuesday's annual meeting that he was "disappointed" by the vote. The company had said illegal use of its guns was a law-enforcement issue.
The resolutions at both gun makers were put forward by a coalition of investors who began buying gun stocks some two years ago to pressure executives for change, Sister Judy Byron, an organizer of the effort said in an interview earlier this year. That work efforts gained wider attention after a Feb. shooting at a Parkland, Fla., high school left 17 people dead.
Michael Passoff, chief executive of Proxy Impact, a shareholder-advocacy group that worked with investors pushing gun makers to review their business, said those groups would keep pressing for deeper changes.
"Halfhearted responses to majority shareholder votes never work out well, " Mr. Passoff said. "The company comes under more scrutiny and shareholders come back asking for even more."
Index giants like BlackRock Inc., Vanguard Group and State Street Corp. have come under increasing pressure to weigh in on issues from climate change to gender pay parity. BlackRock and Vanguard are the two largest shareholders of both Sturm, Ruger and American Outdoor Brands. The two own a combined 20% of American Outdoor, and 27% of Sturm, Ruger, according to FactSet. Because many of their investments track indexes that group companies by size, location or industry, they typically buy and sell less frequently than more active money managers. In April, BlackRock said it would strip firearms retailers from some funds that invest based on environmental, social and governance criteria.
This year, shareholders have voted on 179 proposals related to environmental, social and governance issues, according to the Sustainable Investments Institute. Nine -- including the Sturm, Ruger initiative -- won a majority, according to the report.
Meanwhile, analysts expect the industry to return to sales growth in the fall. American Outdoor forecasts its sales will rise about 3% annually in the year through April 30.
Sturm, Ruger shares are up 30% this year and the company has said it is boosting production in anticipation of higher sales this fall including on Black Friday, an increasingly popular day to buy guns. American Outdoor Brands on Aug. 30 forecast higher-than-expected sales over the next nine months. The company's shares surged 40% the next day.
That is a rebound from last year, when nationwide gun sales fell around 9% to 14 million, according to analysts at IFS Securities, and manufacturers cut production and shed hundreds of jobs. Revenue at American Outdoor fell by a third in the year to April 30.
Big gun makers introduced dozens of new weapons and marketing campaigns to reverse last year's sales slump and rampant discounting as retailers worked through a huge inventory of weapons built up ahead of President Trump's election.
As sales began to recover this spring, Sturm, Ruger executives said they would prepare the report shareholders had asked for on safety measures and reputational risks. But they said they wouldn't take additional steps such as investing in smart-gun technology.
"What the proposal does not and cannot do is force us to change our business, which is lawful and constitutionally protected," CEO Chris Killoy said at Sturm, Ruger's annual meeting in May.
Write to Doug Cameron at doug.cameron@wsj.com and Asjylyn Loder at asjylyn.loder@wsj.com
(END) Dow Jones Newswires
September 25, 2018 18:09 ET (22:09 GMT)
Ruger stock has gone from about $50 to $67 since that happened while AOBC is one of few stocks that has resisted the market climb until just before this came out. It went from $10 to almost $16 in the last month. So from an Investor perspective, it has created a boost in stock price. :)
FLIR is still smokin' both of them.
I wish they'd change the stock back to S&W. The new name does nothing for me. And it sure a heck didn't get me rich. This is a trend, activist investors don't mind loosing money if it helps the children. Sucks, but not too many US gun makers are making money. I think the Henry guy is. And he is a huge fan of America. Also make no evil guns.
Ruger stock has gone from about $50 to $67 since that happened while AOBC is one of few stocks that has resisted the market climb until just before this came out. It went from $10 to almost $16 in the last month. So from an Investor perspective, it has created a boost in stock price. :)
FLIR is still smokin' both of them.
In all honesty, I don't think these activists have really gotten started yet. The only thing I'm aware of that they've managed to do is to force Ruger to produce a gun violence report along with the annual report.
More info here:
https://www.npr.org/sections/thetwo-way/2018/05/10/610019218/sturm-ruger-will-track-gun-violence-after-shareholders-back-activist-resolution
I expect that since the activists have gotten a small victory, they'll begin trying to push other things along the lines of advocating for "universal" background checks, killing off the sales of detachable magazines and the rifles that use them, and forcing them to funnel money into so-called smart gun development.
They probably have not, but the timing of the stock price increase of both is right after articles about this were published on various investor websites. There was little else that could be found that would have resulted in the changes. Ruger is now 91% institution owned, which is a significant increase, whereas AOBC is currently at only 63% institution owned and Vista is at 98%. Over the last 52 weeks, Ruger has been trading above average with a 31% increase in share price whereas Vista (Savage, Federal, etc.) and AOBC are at -24% and +.3% respectively with light trading in the same timeframe. If you keep on the happenings and manage the holdings of your 401K/Investments, it is an interesting space to play in.
So you're thinking that the very fact that these guys did an interview was enough to move the stock price up?
It blows my mind that articles in the press can actually move markets.
Zundfolge
09-27-2018, 10:52
Get woke, go broke is real.
What actually constitutes an "activist" investor? I'm under the impression that when companies go public and get investors involved, they will inevitably lose some power and be asked to do things that they would not normally. So where do we draw the line? It seems like making decisions that can be directly adverse to company health would qualify, but that happens all the time without it being obvious at the forefront of the decision.
So you're thinking that the very fact that these guys did an interview was enough to move the stock price up?
It blows my mind that articles in the press can actually move markets.
I am willing to concede it might be coincidence, but it sure looks consistent. Press Articles certainly influence stock prices. I have seen it happen repeatedly for years. I have stocks that does great with a D in office and others that do great with an R in office...with no connection to real world company performance. I bought several stocks before and after Trumps elections purely based on what I felt the press and market watchers in the press "felt" it would mean. It is a fickle market that has become more fickle in the last 10 years.
What actually constitutes an "activist" investor? I'm under the impression that when companies go public and get investors involved, they will inevitably lose some power and be asked to do things that they would not normally. So where do we draw the line? It seems like making decisions that can be directly adverse to company health would qualify, but that happens all the time without it being obvious at the forefront of the decision.
There have been cases, involving investors with enough money, buying stocks in a company whose "world view" they support in order to prop them up, and others where enough is bought, some profits taken to absorb future loses, and then dumping it in order to drive the price down. Those men and women whose wealth is almost astronomical along with fund managers who wield the power through their clients wealth can, and do use these tactics at times.
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